Forfeiture and reissue of shares” is a process through which a company cancels shares that have not been fully paid for by shareholders and subsequently reissues them to new or existing shareholders. Here’s how the process generally works:

1. Forfeiture of Shares: When shareholders fail to pay the full amount due on their shares as per the terms of the company’s issuance, the company may decide to forfeit those shares. Forfeiture typically occurs after the company sends multiple notices to the shareholder requesting payment, and the shareholder fails to comply within the specified time frame.
2. Cancellation of Shares: Once the shares are forfeited, the company cancels them, removing them from the company’s register of members. This action extinguishes the shareholder’s rights to the forfeited shares, including voting rights and entitlement to dividends.
3. Treatment of Amounts Paid: Any amounts paid by the shareholder towards the shares before forfeiture, minus any expenses incurred by the company, are typically forfeited by the company. These amounts may be used to offset any losses or liabilities incurred due to the forfeiture.
4. Reissue of Shares: After the shares have been forfeited and canceled, the company may choose to reissue them to new or existing shareholders. Reissuing forfeited shares can help the company raise additional capital or fulfill obligations to existing shareholders, subject to regulatory requirements and the company’s articles of association.
5. Board Approval: The decision to forfeit and reissue shares usually requires approval by the company’s board of directors. The board assesses the circumstances surrounding the forfeiture, the potential impact on the company’s capital structure, and any legal or regulatory considerations before making a decision.
6. Notice to Shareholders: Shareholders are typically notified of the forfeiture and reissue of shares through official communications from the company, such as notices sent by mail or announcements made through regulatory filings. Shareholders may have the opportunity to participate in the reissue of shares through subscription offers or other mechanisms.
7. Compliance with Regulations: Companies must comply with relevant legal and regulatory requirements governing the forfeiture and reissue of shares, including provisions in company law, securities regulations, and the company’s articles of association. Failure to comply with these requirements can result in legal challenges or regulatory sanctions.
8. Disclosure Requirements: Companies are usually required to disclose details of the forfeiture and reissue of shares in their financial statements and regulatory filings. This includes information on the number of shares forfeited, the reasons for forfeiture, any amounts forfeited by shareholders, and the terms of the reissue.

Overall, forfeiture and reissue of shares can be a mechanism for companies to manage their capital structure, address non-compliance by shareholders, and raise additional capital. However, it’s essential for companies to follow proper procedures and comply with legal and regulatory requirements to ensure transparency and fairness in the process.